In a stunning move, the state’s highest court has agreed to hear a legal challenge over the use of eminent domain to seize private land for Brooklyn’s controversial Atlantic Yards project.

The Court of Appeals decision, issued in a letter to project opponents, raises new uncertainty today over whether developer Bruce Ratner will be able to build the planned $4.9 million development for Prospect Heights that includes a n NBA arena and 16 office and residential towers.

The court’s decision to begin hearing oral arguments in October wasn’t expected by Ratner, who vowed to break ground this fall after a lower court panel unanimously voted to dismiss the case by Develop Don’t Destroy Brooklyn six weeks ago.

At the time, he told t he Post it was “the final hurdle” holding up construction and would simplify his company’s ability to secure financing during the current credit crunch.

Ratner is in a race against the clock to salvage a scaled-down version of a project he first proposed in Dec. 2003. He has to break ground on the arena by the end of the year to secure $530 million in tax-free financing for the $772 million arena, and the Court of Appeals decision to take the case raises serious doubts over whether the developer will control all of the land needed by year’s end.

“It is a great day for New Yorkers concerned about abuses of power,” Develop Don’t Destroy Brooklyn spokesman Daniel Goldstein said. “We will vigorously continue to defend our rights. But New York State and Mr. Ratner have a choice: they could avoid our legal challenge by finally taking eminent domain off the table.”

Joe DePlasco, a Ratner spokesman, said Ratner is still confident the project can break ground by the end of the year but Goldstein said that based on the new timeline that is “legally impossible.”

“The Appellate Division ruled unanimously in May in favor of the use of eminent domain because of the public benefits associated with Atlantic Yards. We’re confident that the Court of Appeals will come to the same conclusion,” DePlasco said.

The news of Ratner’s latest setback comes a week after the cash-strapped Metropolitan Transportation Authority bailed out the long-delayed project by allowing Ratner to pay off $100 million he owes the agency over 22 years and agreeing to let him to shave off more than $100 million of the $345 million in transit improvements he promised in exchange for various state approvals.